Level 2 - Risk Management

Question 1

1.1 What is risk and how do you manage it on a project?

Answer 1

RICS Guidance Note – Management of Risk

Risk workshops held at the start of the project to develop client and design and construction risks into a risk register, risks reviewed monthly at progress meetings and dedicated workshops.
• Probability
• Severity of impact
• Impact on cost
• Impact on programme
• Risk owners
• Mitigation actions

This allows risk to be calculated and costed and the total cost impact compared to the contingencies levels in the budget to see if there is sufficient cover for the client if all risks were realised in a worst case scenario.

Question 2

1.2 How can you transfer risk?

Answer 2

Procurement route and contract selection, contract terms:
• Design risk to contractor in Design & Build route.
• Risk of ground conditions with contractor in JCT (not NEC).
• Contract amendment or schedule of responsibilities in relation to discharge of planning conditions.

Question 3

1.3 What is Monte Carlo Analysis?

Answer 3

• Monte Carlo Analysis is a type of probability simulation used to understand the impact of risk and uncertainty.
• This can be applied to the best and worst case scenarios in relation to costed risks and through a computer programme simulate thousands of different situations to give a probability of the most likely outcome.